DFA's Opposition to Dean Food Settlement

DFA's press releases on the proposed settlement of the NE case are everywhere (to coin a phrase - none dare call it journalism).

Career board member of DFA/DMS Ed Shoen states in a court document:

When Dean uses this provision to say that the “competitive market price” for
the milk it buys under Section 9.2 is lower than what DMS had been charging, then I’m sure Dean will then want DMS to cut the price on the rest of the milk DMS is selling to Dean so that it too is sold at that lower “competitive market price” that Dean has announced. We’ll end up getting less for all of our milk sales to Dean, and we’ll be selling them less volume, but we’ll still
have the responsibility and cost of balancing their needs at the plants we serve. Under our current arrangements with Dean, one of the services we provide is “balancing” the plants’ needs no matter how supply and demand conditions change over the course of the year. It could be plus or minus 20-30 loads per plant from one day to another. That’s a valuable service and one that costs money to provide, whether it’s disposing of surplus milk or paying for additional milk when milk is short. When we lose this volume, I expect we’ll face the same balancing costs for Dean, but we’ll have less milk to recover those costs. The other possibility is for Dean to do its
own balancing which adds cost on their end for the “independent milk” they have just incurred. It might well have been less harmful to us if the Proposed Settlement gave away all of the volume at one plant, and at least saved us the balancing costs there.

There is no doubt that DFA rules the roost in FMMO I and Dean Foods is the major Class I user. So, if you go to:

http://www.ams.usda.gov/AMSv1.0/getfile?dDocName=STELPRDC5081678

"Announced Cooperative Class I Price for Selected Cities"

You will find the price for FMMO I is 59% of the average and less than half of nearby orders.

Con games always sound so logical.

FFTF

National Milk Producers Federation (NMPF) is pushing hard for its Foundations for the Future (FFTF) program. Colin Peterson is their guy in congress who will make this happen.

NMPF plans to have legislation introduced in the spring.

At this point, the plan seems to be an effort to make certain nothing significant happens. That is probably the exciting part to Peterson. There is no change is price discovery, the insurance program is really all it boils down to. With no change in the power of the CME, why should the "market" give a decent price. However, it is not likely the additional insurance coverage will be as cheap as man may think once the payment to farmers becomes habitual.

Many details are yet to be revealed like other programs roping in dairy farmers. But, Kozak is determined to move full speed ahead.

The sad part is there is an obligation for those at the top to do more. Maybe this is just a mirror image of those on the bottom thinking someone else should do something about their low milk checks. The con game flourishes on few details and much ignorance.